By Derek Newton
Reposted from Forbes, with permission.
Sergio Monsalve is quiet and thoughtful, studied. It’s easy to see him as a teacher.
And it’s not that he intentionally keeps a low profile – given where he is, what he does and what he’s done, that’s probably impossible. But there’s no question that in the universe of education startups and investment capital, Monsalve should be better known.
For starters, Monsalve co-founded the Entrepreneur-In-Residence Program at the Stanford Graduate School of Education, where he also lectures and mentors. Before that, he was a Silicon Valley stalwart – a Partner at Norwest Venture Partners with tenures at household names such as eBay, PayPal. He has a degree from Stanford and an MBA from Harvard.
On the education side, Monsalve was an early investor in unicorns including Kahoot! and Udemy and is now the Founding Partner at his own shop, Roble Ventures. There, Monsalve says, he has created a “human enablement thematic focus.”
Roble’s fund is currently about $26 million. Investments range from $500,000 to $2 million and their portfolio includes seven core investments and six that Monsalve describes as “warehoused.” That’s 13, including promising companies such as Rising Team and Dragonboat. Though the Roble website lists just 11. Two, Monsalve teased, are pending announcement.
With his experience as an investor and educator, it’s no challenge to see why Roble has the focus it does.
“Our mission centers around human enablement because we can’t ever lose sight of why we’re doing it in the first place – to improve the lives of people. To make their jobs easier and more synergistic, and to make learning a lifelong, highly individualized experience. To avoid obsolescence. As a result, our focus is less about strictly education and workforce and more about fostering human adaptability,” Monsalve said.
Those are probably wise words given that he’s been able to look ahead, and been right, before.
“In 2013 I believed that formal education should be extended to all adults, not relegated solely to those in the first chapter of their lives. Today, we refer to it as the concept of lifelong learning. This wasn’t really very well understood, at the time. At the very least people said it wasn’t a venture fundable initiative. But, in reality, it eventually led us to our investment in Udemy. After seven years on that company’s board, we were able to take it public at a $3 billion valuation, which is very substantial for an edtech company,” said Monsalve.
In another example, he relayed his experience in 2016 or 2017, when he saw his kids using “a little app called Kahoot!.” Seeing the innovation, Monsalve said he started using it in his own class at Stanford, which led him to invest. Since, he said, “It has since gone public at a $2-$3 billion valuation.”
With his teaching and leadership roles at Stanford, his past work and current portfolio at Roble, Monsalve has seen and heard a ton of ideas and pitches. In those, he says he looks for a few things.
“One, is the team, the founder especially,” he said. “Two is the size of the market and the neighborhood they’re going to be working in. What’s less important is that they get the business model or the product exactly right. They don’t need to have product market fit just yet, and that’s fine; at this stage, what I’m looking for is entrepreneurs who meet the handful of criteria that is going to make them special, that is going to allow them to build something special. Only a very small percentage of entrepreneurs in the world have that X factor, so to speak,” said Monsalve.
He continued, “You can tweak and experiment with sales models and product features, but you can’t teach a founder how to be persistent, how to instill intellectual curiosity, mental honesty, the ability to have a purpose that drives them and draws followers to them. We’re not just looking for someone who knows the product, though that is in itself very important and not to be overlooked; we’re looking for a storyteller, an explorer, someone who we have no doubt in our mind about supporting, again and again.”
Those experienced in the growth or entrepreneurial mindset will recognize several of those traits – persistence, flexibility, curiosity.
On the other side – things in pitches or startups that give him pause – Monsalve said, “Someone with a very fixed mindset is a pretty big red flag to us.”
By comparison, Roble is rather selective, which Monsalve confirms.
“We have a very high-conviction portfolio, which means that when we invest in a company, we go all in and invest a higher percentage of our fund than others like us. So, there are fewer companies on our portfolio page, but each logo you see there worked hard to earn their spot. We believe that our thematic approach allows us to better pick the winners. We’re the opposite of a spray-and-pray fund,” he said. “We’ve done our homework before a company even shows up to pitch us,” Monsalve said.
Citing a market of “overhyping” and “copycats” in edtech after the pandemic set in, Monsalve remains focused on the next ten or twenty years.
Among the things he sees in that future is “in 10 years we’re going to see the death of books. That notion already sounds pretty blasphemous, like something a tech guy would say, right?
“But what I mean by that is that books, especially textbooks, represent a very one-dimensional way to learn. It’s inanimate, fixed, monolithic, one-way. It’s not the optimal way to learn. Not only that, but a book is very visual, and one of the most important recent breakthroughs we’ve been researching at Stanford is that one of the biggest opportunities in education is to unleash every single mode of learning to appeal to the widest possible audience of learners,” he said. Another one of his portfolio companies, Kinjo, is working on doing this now, he said.
“What we see right now is a lot of generalist funds that don’t stand for anything. They’re just gigantic capital allocators. Even some of the more thematic funds take a very tech-centric view of the world — trying to see how crypto or the blockchain can find use cases in this industry or that industry. This approach is akin to a dog chasing its own tail,” Monsalve said. In contrast, he said, “Our definition of human enablement will expand, allowing us to take a more 360-degree view of what it means to reach our full potential.”
It’s a thoughtful approach. One that’s clearly paying off. And not just financially.